The Central Bank set a ceiling of 25 percent of a customer’s total Lebanese pounds deposits for borrowing in the local currency, according to a circular by Banque Du Liban dated Aug. 10 and received by banks in recent days.
The circular added that if banks exceed the ceiling, the lenders must deposit the additional amount in a frozen account at the Central Bank with no interest rate until the violation is settled. BDL did not explain the reasons behind the move.
At the end of June, the total of loans to deposits in Lebanon were 35.2 percent in Lebanese pounds and 34 percent in dollars.
Nicolas Chammas, the president of the Beirut Traders Association, told The Daily Star that he is quite confident with all the monetary measures adopted by Central Bank Gov. Riad Salameh.
“Salameh is behind the steering wheel and is keen to safeguard the monetary policy and these recent measures are part of efforts to protect the liquidity,” he added.
Chammas stressed that the private sector and consumers can borrow in dollars if they wish.
He said setting a ceiling for borrowing in the local currency would have no negative effects on the economy. “We should keep in mind that BDL has over $44 billion in foreign currency reserves and this covers over 80 percent of the money supply in Lebanese pounds in the market,” Chammas said.
At the end of June, total private sector deposits reached $173.3 billion, increasing by 2.8 percent from the end of 2017 and by 3.3 percent from a year earlier.
Deposits in Lebanese pounds reached the equivalent of $54.7 billion at end-June 2018, up by 3.7 percent from end-2017 but down by 2 percent from end-June 2017.
Deposits in foreign currencies totaled $118.6 billion at end-June 2018, and grew by 2.3 percent from end-2017 and by 6 percent from $111.9 billion a year earlier.
Resident deposits totaled $136.6 billion at the end of June this year, increasing by 2.3 percent from the end of 2017 and by 2.7 percent from end-June 2017.
Nonresident deposits reached $36.7 billion at end-June this year, up by 4.5 percent from end-2017 and by 5.7 percent on from $34.8 billion a year earlier.